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U.S. Department of Labor Proposes New Overtime Rule

March 11, 2019

On March 7, 2019, the U.S. Department of Labor (DOL) announced its highly anticipated proposal for a new overtime rule in its Notice of Proposed Rulemaking: Overtime Update (NPRM). This proposal would raise the overtime salary threshold required to qualify for the Fair Labor Standard Act’s “white collar” exemption from $23,660 to $35,308 per year. The weekly threshold salary level will increase from $455 to $679. The new proposed threshold is about $12,000 lower than the Obama administration’s prior proposed overtime threshold. Eligibility for overtime is also based on meeting certain job duties tests.

The proposal also increases the total annual compensation requirement for “highly compensated employees” from the currently enforced level of $100,000 to $147,414 per year. Additionally, the DOL plans to propose updated salary levels every four years to update the salary threshold, which would require notice-and-comment rulemaking.

If the new overtime rule is implemented, employers may use nondiscretionary bonuses, commissions and incentive payments that are paid annually or more frequently to satisfy up to 10 percent of the standard salary level.

There will be a 60-day public comment period. The DOL stated that it will consider all timely comments in developing a final rule, which is estimated to take effect in January 2020.

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